Another Bid to Watch: United Technologies Goes After Diebold

[Update below] I'm not the first to notice this -- there was an AP piece floating around last week on same -- but the number of unsolicited, big-premium buyout offers coming out during the market swoon is an interesting trend. The latest: United Technologies (UTX) is making a bid for Diebold (DBD) representing a 66 percent premium. This follow EA's (ERTS) bid for TakeTwo (TTWO) and of course that one with Microsoft (MSFT) and some other company.

Diebold, like the other two, is languishing near 52-week lows, well off their 52-week highs. Monday morning it'll spike up, obviously. What interests me are the uniform reactions that the minnows have to the larger fish coming to swallow them.

They have to say that the bid "significantly undervalues" them. Especially, when there's been a prior private (rebuffed) approach, which there was here (just like YHOO and TTWO). Here's part of the letter UTX sent to Diebold:

United Technologies offers to acquire all of the outstanding shares of Diebold for $40 per share. This is a 66% premium to Diebold's current share price and a 45% premium to the three month trailing average.

We have sought for more than two years to engage Diebold in constructive discussions to increase your shareholder value. Most recently, I wrote to you on February 19th outlining the benefits to Diebold's shareowners, employees, and other constituencies of a business combination.

And this is somewhat unusual. UTX included a copy of the letter Diebold sent earlier in February (I don't recall ever having seen this before):

I have received your letter to me dated February 19, 2008. As you correctly noted in your letter, the prior overtures on your behalf to me and another Diebold director were discussed extensively at a regularly scheduled Diebold board meeting last week. After careful consideration, our Board unanimously determined at that meeting that it was not in the best interests of the corporation or its shareholders to pursue discussions with UTC regarding a business combination with Diebold. Nothing has changed since that meeting that warrants revisiting this issue.

In addition, we respectfully request that, from here forward, neither you nor any other representative of UTC contact any member of the Diebold Board.

So now, having written that, they're faced with a public bid on a Sunday night. They can't just accept the bid and realistically, they can't say the bid is too low, because it's 66 freakin' percent above the market cap, unless they really think the market is totally on crack, which is conceivable. Anyway, all of these: TTWO, YHOO and now DBD will be interesting to watch to see how they play out.

Update:
So says Diebold:

The board strongly believes that UTC's proposal significantly undervalues the company and fails to reflect Diebold's strengths and significant upside potential.

The exact same language as I predicted. But of course, in the language of buyout-ese, that's pretty much the most common phrase there is. Next comes the part about UTX being "disappointed" by Diebold's response. And then the two sides go quiet for awhile.